How is Your Home’s Value Appraised?

When it comes to appraising the value of your home, you might be surprised by the vast difference in value of your home when compared to one that is nearby. In fact, in some cases, the appraised value of homes located right across the street can be much higher or much lower than the appraised value of your home. Why is there such a discrepancy in these values? The answer is simple: market value.

Calculating Market Value

In order to determine a market value, appraisers must crunch a variety of different numbers. Obviously, it is impossible to determine the true 100% market value of a home because every house across the nation is not put up for sale each year. Therefore, appraisers have to piece together a variety of information in order to determine the value of your home. This includes looking at the average percent change in value for homes in the neighborhood, which is based on sales information that is available. This information is then used to help determine of a home’s value.

If there is no recent sales information available for the neighborhood, the appraiser may look at similar homes in different communities instead. By looking at homes of similar size and with similar amenities, an appraiser can get a good idea of the value of the home. Nonetheless, the differences in neighborhoods needs to be taken into account, as some neighborhoods are simply more desirable to potential buyers than others. For example, a home located on a golf course is certainly going to have higher appraised value than one that is not, if all other attributes are similar.

Considering Special Circumstances

Of course, there are special circumstances about homes that can make their actual value different from others in the same market. For instance, if your home is located in a part of the neighborhood that is near a highway, your value will likely go down because of the noise and distraction of the highway. On the other hand, a home that is located on a corner lot or near to a park may have a higher appraised value because of the added land or convenience it brings to the homeowner.

Determining the value of a home in a neighborhood where the houses are of varying sizes can also be difficult. In some areas, where each home is of similar in size age and attributes, finding comparable sold homes is easy and appraisals are generally quite accurate. In the neighborhoods where this is not the case, however, the value of one home can be much less or much more than the value of the home located next door.

In order to get an accurate appraisal, a variety of factors need to be taken into consideration. In addition, it is important to remember that an appraisal is not a guarantee of the amount of money you can expect to get for your home. Rather, it is a good starting point for you to use when determining how much you would like to receive when selling your home.
Appraising is an “art”, not a “science”. If you hire two different appraisers to value your home, you most likely will get two different values.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of home appraisals that offers a nationwide personalized instant informational report about house values. For more information, please visit www.electronicappraiser.com .

Should You Invest in a Swimming Pool?

When it comes to increasing the value of your home, you may think that adding a pool to your backyard is a good investment. After all, we all remember the kid in the neighborhood that had the swimming pool and opened it up for swimming parties throughout the summer. Still, while many people enjoy having a swimming pool, there are many that don’t want the hassles of pool ownership either. Therefore, adding a swimming pool to your property isn’t necessarily a good way to boost its resale value.

Reasons to Avoid Putting in a Pool

When it comes to selling your home, having a swimming pool can be more of a liability than a help. For parents with small children, for example, a swimming pool is looked as a potential danger rather than a joy. After all, it doesn’t take much for a curious child to wander over to a pool and fall in. Therefore, you can lose a significant part of the market when you have a pool on your property.

A pool will also reduce your available market because your home will simply be too expensive for them to buy. In order to recoup your expenses, you will ask a higher price for your home. As a result, certain potential buyers will not be able to pay the additional costs or won’t be willing to pay the higher price for a home with a pool. So, you will be faced with either having to drop your price or waiting longer to find a buyer that is willing and capable of buying your home.

When Having a Swimming Pool Can be a Plus

Although having a swimming pool can be a liability, there are certain situations during which it is advantageous to have a swimming pool. For example, if you live in a neighborhood where most of the homes have a pool, failure to have a pool can significantly bring down the value of your home. Therefore, it is important for you to consider your neighborhood when determining whether or not having a swimming pool is good investment.

If you live in a neighborhood that caters more to middle-aged buyers with teenage children, having a swimming pool will also be more of a draw. After all, by the time the kids are teens, safety concerns are not as great and teenagers love the idea of having a pool to enjoy with their friends.

When all is said and done, having a pool will certainly increase the overall value of your home. At the same time, it does not have a significant return on investment. In fact, most appraisers will deduct anywhere from 40 to 60% of what you paid to install the pool when determining the value of your home. Therefore, if you want to have a pool and you plan to stay in the home for years to come, go ahead and install one. If you are planning to move in the near future, on the other hand, don’t view a pool as a good investment.

About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of on-line home appraisals and offers a nationwide personalized instant informational report about home appraisal. For more information, please visit .
www.electronicappraiser.com .

Estimating Your Home’s Value

While the best way to get an estimate of your home’s value is to consult with a professional appraiser, it is possible to get a ballpark figure on your own. By coming up with your own estimate, you can better determine if you are ready to contact an appraiser and put your home on the market. In general, there are two things to consider when trying to estimate the value of your home: How does your home compare to similar homes in the area have recently sold for and how much do you adjust to compensate for superior or inferior features of your home.

Considering Comps

When trying to develop an estimated value of your home, you will first need to compare your home to other similar homes that have sold in the area. The homes you use for comparison purposes are referred to as “comps or comparables.” It is important to note that market activity can change dramatically in just a few months’ time. Therefore, it will do you little good to compare your home to a home that sold over a year ago if there are homes that have sold recently. Rather, you should only consider those homes that have sold in the last six months or less. In actuality, however, it is best to only look back at the past three months.

If your home is in a market that is not particularly active, it may be difficult to find comps in your area. Similarly, if your home has special features that are not regularly found in homes in your area, you may not be able to find a reasonable comp to use for comparison purposes. Significant international and national events, such as war and elections, can also cause sudden changes in housing prices.

Amenities and Other Considerations

In addition to comparing your home to other similar homes in your area, there are several other factors that need to be considered when estimating the value of your home. These include:

• Age of the home
• Amenities
• Location
• Size
• Condition

In general, you should compare your home to a home that is of similar age to your home. Homes of a similar age and location typically also have similar amenities. Of course, this isn’t always the case, as your home may include other special amenities such as a pool, a bonus room, a great view, or a particularly large garage.

Ideally, you should compare your home to other homes that are in the same area as yours. If there has been no recent activity in your area, however, you might need to compare your home to other homes in neighborhoods that are similar to yours. In order to find a neighborhood similar to yours, look for one with homes that were built around the same time as yours and that are of comparable size.

The size of your home is another important consideration. The total square footage of your home, the number of rooms in your home, and even the size of your garage will all have an impact on the value of your home.

Since so many factors are involved with determining the value of a home, it can be difficult for a homeowner to develop a precise estimate of its value. Therefore, in order to get a more accurate appraisal of your home, it is best to enlist in the services of a professional appraisal service, a local real estate agent and or a on-line valuation company.


About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.electronicappraiser.com/, which is a leading provider of on-line home appraisals and offers a nationwide personalized instant informational report about home appraisal. For more information, please visit .
www.electronicappraiser.com .

The appraisal industry has changed…..forever!

AVM’s have forever changed the way Wall Street, Lenders and Banking industry use appraisal. You may be asking yourself, what is an AVM and how does it affect the appraisal industry?

AVM is short for "Automated Valuation Model". Appraisers, Wall Street and Lending Institutions all use AVM technology in their analysis of residential property. An AVM is a residential Valuation Report that can be obtained in a matter of seconds. It is a technology driven report. The product of an automated valuation technology analysis, public record data, and computer decision logic combined to provide a logical calculated estimate of a probable selling price of a residential property. An AVM generally uses a combination of two types of evaluation, the running of a hedonic model and a repeat sales index. The results of each are weighed, analyzed and then reported as a final estimate of value based on a requested reasoning date. http://www.electronicappraiser.com/why.cfm

AVM’s have been around since the late 1990’s. For decades, mortgages have been constantly bought and sold in large groups of loans, (pools) by banks, institutional investors and Wall Street. As technology caught up with the demand, there arose a need to rapidly evaluate large groups of residential loans without appraising each property associated with the corresponding loan. This has always been an expensive process that could take several weeks to complete. AVM technology allowed the addresses associated with each loan to be fed into a computer, AVM reasoning would be applied to each property and result in a report of the then current “market” value for each property in a loan pool. The AVM would assist the institutional investor in determining their risk for that pool.

As AVM technology improved, many uses for them evolved. Not only were they being used for large pools, but also for individual loans. Fifteen years ago, a no closing-cost loan was virtually unheard of, with AVM’s they became commonplace. Loans were just too expensive to process, one of the largest costs being that of a traditional appraisal. AVMs allowed lenders to quickly evaluate a property and in many cases determine if a full appraisal were necessary to fund a loan, and could be done inexpensively. This was especially true in “portfolio” loans, loans in which a lender did not intend to sell.

AVM’s give a non-partial analysis, appraisers are constantly being persuaded by real estate brokers and loan agents to hit a certain value. There is no bargaining with an AVM, the computer determines a non-biased value, thus greatly reducing the risk of fraud.

AVM’s are attractive in price, significantly lower than a traditional appraisal. From $25-$50 for individual reports, to a few dollars each if bought in bulk.

AVM’s have not evolved to the point where they are able to replace the appraiser, nor are they suited for every use. For example, they are relatively new to the market in originating first mortgage loans and in a rapidly changing real estate market (up or down), local knowledge is a must. The acceptance and uses of AVMs is constantly expanding, and as it expands the need for a traditional appraisals will continue to diminish.

About the Author: Greg Sullivan is the President of www.electronicappraiser.com, a leading provider of home appraisals offering a nationwide personalized instant home appraisal service. For more information, please visit www.electronicappraiser.com.